Mixed week for US stocks as tech skids

CORPORATE OUTLOOK:The release of the first round of major earnings reports next week will determine where the markets are headed next, analysts said

AFP, NEW YORK

People dressed in food-themed costumes walk on the floor of the New York Stock Exchange to celebrate the initial public offering of GrubHub in New York on Friday. Shares of the biggest US online food-delivery service rose as much as 57 percent in its market debut, as investors scrambled for a piece of the fast-growing consumer internet company.

Photo: Reuters

US stocks had a mixed week with the broader market rising on better economic data, but technology stocks faltering on concerns about a downturn in the bubble-prone sector.

The Dow Jones Industrial Average added 89.65 (0.55 percent) at 16,412.71, while the broad-based S&P 500 tacked on 7.47 (0.4 percent) at 1,865.09.

However, the tech-rich NASDAQ Composite Index, after rallying in the first part of the week, finished with a net loss of 28.03 (0.67 percent) at 4,127.73 following big drops on Thursday and Friday.

Investors are scratching their heads given that technology stocks have been “leaders” in the bull market, he said.

“Because there’s a lack of leadership, the market is probably more cautious,” Levy said. “It’s hard to find a catalyst to buy into this market at this point.”

It was not a bad week overall for the markets. The S&P 500 even hit record closes on Tuesday and Wednesday.

Most of the week’s economic data were fairly solid, if unspectacular. Reports from the Institute for Supply Management showed rising activity for both manufacturing and service sectors. On the downside, the US trade deficit rose sharply in February.

However, the week ended with a decent jobs report from the US Department of Labor, which said the nation added 192,000 jobs last month. The report also revised job growth in January and February upward by 37,000 jobs.

“The post-winter rebound we hoped for did not happen, but the winter hit was smaller than previously believed,” Ian Shepherdson of Pantheon Macroeconomics said.

“It’s all been momentum,” said Michael James, managing director of equity trading at Wedbush Securities.

“As the stocks go lower and continue to go lower, portfolio managers have to react,” he said.

“They may not want to be selling stocks, but they can’t allow this to keep going,” he added.

Most analysts do not believe the NASDAQ faces another retreat like the one in the early 2000s when the bursting of the so-called tech bubble precipitated a fall in the index of more than 75 percent from the all-time high in 2000. For one thing, many of the sector’s favored companies are profitable. There may be some companies that are overvalued, but not as many and not by as much.

Levy said the upcoming earnings season will be “very important,” especially for the technology sector.

A strong technology earnings season could stabilize the NASDAQ, while disappointing results could trigger deeper losses, he said.

Next week’s calendar includes the first round of major earnings reports, with results from Alcoa and banking giants JPMorgan Chase and Wells Fargo. Most major technology earnings reports will be released later this month.